I recall the moment I decided to figure all this out. I was called down to a mediation to help the plaintiff attorney, defense attorney, mediator, and structured settlement specialist figure out what in the world a “donut hole” meant. This might have been around 2008 or so, definitely soon after Medicare Secondary Payer regulations became part of our daily vocabulary.
We’ve come a long way since that time, but so has CMS with even more guidelines and requirements. We all now know how to read a WCMSA; the allocators are doing a good job projecting medical costs; submission to CMS is running a bit smoother. We still need clarification on many things, but the compliance process seems to have more continuity and consistency these days.
Woefully unaddressed by plaintiff attorneys is: “how do we handle all the future medical care costs not covered by Medicare?” Things like home attendant care, bathroom equipment, transportation, certain prescribed medications, all over-thecounter preparations, vision and hearing care, visits to podiatry, TNS units, and many others. And what about the cost of professional administration? No one ever mentions the cost of the insurance premium package REQUIRED by Medicare before they pay anything at all, even on covered medical treatment. Oh, yes, and the “donut hole”, daily co-pays, annual deductions, and the 80/20 rule.
We have all been mindful not to shift the burden to Medicare, but, in essence, that is what is happening to the claimant in Workers’ Compensation cases. How can the attorney properly advise the client how or when to settle the medical portion of a claim without full discovery of all the costs? How can a client make an informed decision without all the facts?
Some attorneys have chosen to “just leave medicals open” to avoid dealing with the MSP issue. Some attorneys have accepted only the MSA amount to close out medicals. Some attorneys have advised the client to not apply for Social Security Disability benefits until after the settlement, again to avoid the need for an apportionment. None of these steps is always the best approach. Some might work for the short term, but the issue doesn’t go away. One of these approaches actually has the potential to set up an even bigger problem for the plaintiff attorney when the MSA money cannot be used for unidentified medical expenses.
So, back to 2008: after figuring out what the “donut hole” meant, I decided then to find out all I could about how to use these new regulations for the benefit, and not to the detriment of the injured worker. My first step was to figure out exactly what did having Workers’ Compensation insurance coverage mean? What did WC Insurance cover?
Here is an overview of what I learned:
OVERVIEW OF WORKERS’ COMPENSATION INSURANCE BENEFIT PACKAGE:
Workers’ Compensation is a no-fault insurance program designed to provide medical and wage loss benefits to workers injured on the job. When transitioning the injured worker from the Workers’ Compensation Insurance Program to another insurance coverage, such as the Medicare Insurance Program, it becomes imperative to fully understand the scope of WC benefits currently offered to the injured worker. Equally important is to understand the WC benefits, as they would be described in CMS language. Workers’ Compensation Insurance benefits include a combination of medical treatment and claim’s benefits. Workers’ Compensations medical benefits, as described by Medicare, include the following factors:
- Payment of all inpatient treatment covered by Medicare
- Payment of all outpatient treatment covered by Medicare
- Payment of all prescription drugs covered by Medicare
- Claim’s administration
- Premiums for inpatient treatment (Medicare Part A)
- Premiums for outpatient treatment (Medicare Part B)
- Premiums for prescription drugs covered by Medicare (Medicare Part D)
- Payment of co-pays/deductibles for inpatient/outpatient treatment (Medigap)
- Payment of all co-pays/deductibles for prescription drugs, also “donut hole”
- Payment of all prescription drugs not covered by Medicare
- Payment of all medical treatment not covered by Medicare
- Transportation/mileage for all medical appointments
After knowing what was in place, I took the next step to understand what was being offered to replace the 100% coverage required from the Workers’ Compensation insurance carrier/ employer for the injured worker. I learned that CMS did not require an apportionment (the MSA) at all. CMS was happy to have the total amount of settlement spent on future medical if no apportionment made to reasonably consider their interest. Some attorneys believe an MSA is required. Quite the contrary. Here is what I found out about the MSA:
OVERVIEW OF MEDICARE SET ASIDE ALLOCATION:
The MSA is not a substitute for a full Life Care Plan. The MSA is a document prepared based on past medical history, diagnoses codes, and standards of care to be used in determining reasonable consideration of Medicare’s interest for future medical treatment. The MSA predicts future medical costs for injury related treatment for those expenses typically paid for by Medicare. The MSA allocator, working under CMS guidelines, uses certain discounting factors, such as rated age, average wholesale pricing of drugs, generic versus brand name drugs, limited dosing schedules, and reduced prescription coverage, to provide appropriate information to CMS. Since Medicare does not cover all medical treatment options or prescription drugs, the MSA does not address these components. Of all 12 benefits described above, the MSA addresses only the first 3 components listed above. The MSA protects Medicare’s future exposure.
Next, after figuring out what Workers’ Compensation Insurance was and what the MSA was/was not, I then came up with the future medical care factors that comprised what we now consider the “noncovered” future medicals. Here is my explanation:
OVERVIEW OF THE NON COVERED ALLOCATION (NCA):
The NCA report is designed to identify those costs that Medicare does not cover, including premiums that are required to be in place prior to participation in the Medicare Insurance Program. The NCA also discusses the significant co-pays and deductibles for both medical treatment and prescription drugs required as a participant in the Medicare Insurance Program. The NCA further estimates costs associated with claim’s administration and transportation—both of which are part of the Workers’ Compensation Insurance Program benefit package. The NCA addresses all but the first 3 of the components listed in the General Overview of Workers’ Compensation Insurance Program Benefits in above section. The NCA protects the client’s future exposure.
IN SUMMARY, THE MSA PROTECTS MEDICARE; THE NCA PROTECTS THE CLIENT AND THE PLAINTIFF ATTORNEY.
After knowing all this, I still had some work to do. I had to come up with a report format outlining the non-covered factors in each case, a way to quantify those factors, and, finally, a program to teach attorneys the importance of identifying all future treatment costs, covering all 12 points identified. When I started the educational process I also learned that many attorneys did not understand the difference between Medicare and Medicaid, and the impact of each program on settlement and post-settlement issues–so my educational platform broadened a bit to include the basics of federal and state programs and the impact on settlements.
Living in Charleston, South Carolina, my practice has been to help plaintiff attorneys in the South East region but this overview applies to all attorneys across the United States who are dealing with the federally guided Medicare Secondary Payer regulations.
I’ve prepared notes from attorneys in my region:
- Attorney Leonard Jernigan, from Raleigh, North Carolina
- Attorney Mark Sumwalt, from Charlotte, North Carolina
- Attorney Jon Hawk, from Macon, Georgia
- Attorney Ken Harrell, from Charleston, South Carolina
- Attorney Bryan Ramey, from Greenville, South Carolina